When creating a process order, a production version with master recipe and bill of material (BOM) is selected and the referenced BOM and master recipe are copied into the process order.
Production Version Selection

If a process order is created by means of planned order conversion, the production version of the planned order determined by the MRP run is copied to the process order. The dependent requirements of the planned order that are defined by the material components of the BOM are converted into reservations for the process order. If a process order is created without reference to a planned order, for example when you manually create a process order, the system selects the production version according to various selection criteria which we will discuss in this lesson.

As displayed in the figure, a production version has a validity period and a lot size range. A planned order or process order has a production quantity and basic dates. For a production version to be selected for a planned order or process order, the production quantity and the basic start date of the order must lie within the validity period and the lot-size range, respectively, of the production version. If several valid production versions exist in the system, the alphanumerically first production version is selected by default. In the displayed example, three valid production versions (0001, 0002, and 0003) are available and the system automatically assigns production version 0001. Please note that you always have the option to manually change the selected production version.
Note
The Read Master Data function in a production order allows you to replace the originally selected production version with a different valid production version. This exchange is only possible as long as no material movements and confirmations have been posted. The function is also useful if, for example, you changed the recipe master data after creating the order and you want the process order to also incorporate the latest recipe changes.
As already mentioned, if several valid production versions exist, the alphanumeric first production version is selected for a planned order or process order by default. You can change this behavior by defining quota arrangements. In a quota arrangement, you can specify the quota of each production version, for example, 50:50 if two production versions are available. When an order is created, the system checks the previously produced quantity and assigns the production version which is needed to fit the quota.
Production Version Consistency

When you create or maintain a production version when maintaining the master data, you must ensure that all three master data objects, that is, the production version, the master recipe, and the BOM, are consistent. To be consistent, the lot-size range of a production version must lie within the lot-size range of the assigned master recipe as well as of the assigned BOM. Furthermore, the master recipe and BOM must be valid during the whole validity period of the production version. SAP S/4HANA Cloud Public Edition, offers a consistency check function in the Manage Production Versions app.
Consider the following example: You manufacture a finished product in small lot sizes (for example 1...100 L) and in big lot sizes (101 … 10.000 L). Since the manufacturing process is executed on two different machines, you must define two different master recipes which have different resources assigned to the manufacturing operations. However, the BOM is defined for the entire lot size range from 1 to 10.000 L as the required components do not depend on the machine. To implement this scenario in the system, you define two production versions, for small and big lot sizes, respectively:
To the first production version, you assign the first master recipe and the BOM.
To the second production version, you assign the second master recipe and the BOM.
When executing a consistency check, both production versions are valid since the lot sizes of both production versions lie within the lot size range of the BOM.